An Analysis of the Structure and Growth Trend of Government Total Expenditure in Nigeria from 1960 to 2015

Abstract

This empirical study of the structure and growth trend of government total expenditure in Nigeria from 1960 to 2014 is more of a stock-taking exercise. The study examines the growth trend and pattern of government expenditures over the intervening period. It also investigates the items of expenditure that are potentially amenable to wide discretionary adjustments by fiscal authorities in Nigeria. The study adopts the ordinary least squares (OLS) quantitative analysis. Results show that the trend of growth of government expenditure in Nigeria was largely explained by the growth in Nigeria’s per-capita GDP used as proxy for economic growth. It was also found that debt servicing and rate of inflation contributed to the bloated size of the country’s expenditure. Similarly, it was found that capital expenditure programmes usually generally stand more amenable to discretionary adjustments by fiscal authorities than the recurrent expenditures particularly during difficult economic times. This is understandable because unless government resorts to lay-off workers, the easiest way out is usually to manipulate the capital expenditure profile.  Several recommendations were made among which include increasing investments in the real sector and diversifying the economy to bring down the present high inflation rate and halt the total collapse of the value of the local currency.

Key words: Government expenditure, public spending in Nigeria, expenditure pattern, structure of government total expenditure, items of government expenditure

Acknowledgement: We wish to express our gratitude to Professors S.E. Omoruyi, Longe, J.B and many others including some government institutions especially the central bank of Nigeria (CBN) and national bureau of statistics (NBS) whose library we used and collected data from for this study. However, we take responsibility for any errors in this work.